COPPER smelters are looking to make more investments in mines, pushing to shore up supply of concentrate at a time when competition for the raw material is heating up, industry executives have said.

China is the world’s biggest consumer of the metal but its own copper mine production has been stagnating amid a crackdown on pollution, exacerbating a heavy reliance on imports.

More direct tie-ups with mines would diversify smelters’ sources of supply, as well as potentially giving them more sway in annual supply negotiations with large global miners such as BHP and Freeport-McMoRan Inc.

Taking a stake in a miner or offering capital in return for supply could also eat into the business of global trading houses.

“In terms of strategic planning for the future ... I think our focus would be on shares in the capital of the upstream companies,” said Xu Yuanfeng, general manager of the trading business unit of Jiangxi Copper Co., one of China’s biggest copper smelters.

Jiangxi Copper is signing more contracts to source concentrate from miners directly, while the “proportion of our contracts with traders is going down,” Xu said.

Qi Zhigang, executive vice president of private smelter Shandong Xiangguang Group, which uses 100-percent copper concentrate and no scrap to make refined copper, said his firm was also looking to deal with copper mines directly.

(SD-Agencies)